BlueStone Q4 FY26: Growth stays strong, margins improve, but working capital remains the key debate

BlueStone Jewellery and Lifestyle Limited closed FY26 with a sharp acceleration in growth and a visible step-up in profitability metrics, even as the balance sheet continued to absorb a large working-capital build. In Q4 FY26, standalone revenue from operations was INR 687.66 crore, up 49.1% year on year. For the full year, revenue from operations reached INR 2,441.23 crore, up 37.9% over FY25.

Profitability improved across the operating stack. FY26 standalone gross profit rose to INR 1,040.90 crore, translating into a gross margin of 42.6% versus 37.9% in FY25. Contribution margin expanded to 38.3% in FY26 from 30.3% in FY25, indicating better unit economics and improved cost absorption.

The company also reported a large difference between accounting EBITDA and what it calls “Pre-IND AS” operating performance. Q4 FY26 included an inventory gain of INR 52.36 crore. Excluding such gains, pre-IND AS EBITDA in Q4 FY26 was INR 50.94 crore (7.4% margin). For FY26, pre-IND AS EBITDA excluding inventory gains was INR 180.58 crore, a margin of 7.4%, versus 1.0% in FY25.

Omnichannel expansion: stores continue to be the growth engine

BlueStone positioned itself as India’s second largest “digital-first” omnichannel jewellery brand. As of March 2026, it operated 340 stores across 134 cities and serviced 12,661 PIN codes. The company added 65 stores in FY26, including 17 stores in Q4.

Management repeatedly linked store expansion to the company’s omnichannel model, where online demand signals guide store rollout and offline experience improves trust and conversion. The presentation included two city case studies.

In Ranchi, revenue increased from INR 0.70 crore in FY22 with 1 store to INR 22.90 crore in FY26 with 2 stores. In Lucknow, scaling store density from 2 stores in FY22 to 6 stores by FY24 corresponded with revenue expanding to INR 68.30 crore in FY26.

During the earnings call, management indicated an intent to grow distribution at about 20% annually, describing it as a balance between new store additions and the rising productivity of existing cohorts.

Brand strength and customer metrics: repeat base deepens

BlueStone’s operating narrative leaned heavily on repeat behavior and design-led differentiation. In FY26, the repeat revenue ratio was 54.5% on a standalone basis. In Q4 FY26, repeat revenue ratio was 55.9%. The company’s life-to-date customer count rose to 944,062 in FY26 from 771,845 in FY25.

Average order value expanded meaningfully. FY26 AOV was INR 66,311, up 63.7% year on year. Q4 FY26 AOV reached INR 74,816.

Marketing efficiency also improved. Advertising and marketing cost as a share of revenue reduced to 6.6% in FY26 from 9.0% in FY25. In the earnings call, management said the company does not intend to reduce A&P below 6% of revenue, and expects to increase absolute marketing spends while keeping the ratio broadly stable. The stated objective is to shift more incremental spend toward long-term brand building rather than only performance marketing.

Inventory, cash flows, and capital efficiency: the trade-offs of scaling

The biggest point of tension in the disclosures is working capital. Average inventory increased from INR 1,391.90 crore in FY25 to INR 2,152.10 crore in FY26. The presentation showed inventory turnover ratio declining to 1.13 in FY26 from 1.34 in FY25.

Management attributed much of the apparent slowdown in turns to the sharp rise in gold prices, which inflated the value of closing inventory across the sector. They also said mature stores (those with more than three to four years of operations) show higher inventory turns in the range of 1.7 to 1.9, based on internal tracking.

Cash flow statements reflect the same working-capital pull. Standalone cash flow from operations was negative INR 175.31 crore in FY26, driven by inventory build and changes in gold-on-loan and customer liabilities, even as the company reported profit before tax of INR 26.00 crore.

Despite that, net leverage improved. Net debt reduced to INR 346.90 crore in FY26 from INR 617.10 crore in FY25, and net debt to equity reduced to 0.19x from 0.68x.

ROCE, as presented by the company (EBIT divided by equity plus net debt), was 1.6% in FY26, down from 4.7% in FY25. The presentation noted that FY26 includes balance lying in the public issue account, which can mechanically affect capital employed and the ratio.

ESOP costs and normalization: a disclosed path to lower charges

ESOP expense remained a meaningful reported cost. FY26 standalone ESOP charge was INR 92.65 crore versus INR 51.24 crore in FY25.

The company provided an ESOP charge schedule for existing grants indicating a taper from FY26 to FY30: INR 92.7 crore (FY26), INR 57.5 crore (FY27), INR 28.9 crore (FY28), INR 12.9 crore (FY29), and INR 4.8 crore (FY30). Management said this front-loading is driven by accounting and that an unallocated pool of about 2.6 million shares (about 1.7% equity) is available for future talent needs.

What to watch from here

BlueStone ended FY26 with strong top-line momentum, rising cohort productivity, and improving gross and contribution margins. Management emphasized that the omnichannel model is a structural advantage and highlighted its ability to expand beyond metros with city-level evidence. It also spoke about an entry-level portfolio recalibration using design and manufacturing innovation, with benefits visible in Q4 and expected to continue through FY27.

At the same time, the financial statements show that growth is still capital intensive, particularly through inventory and working capital. The company’s ability to maintain growth while improving operating cash conversion, stabilizing inventory efficiency, and sustaining margins through mix volatility will remain the central questions for investors as it moves into FY27.